j.ello on IT Part 3: I’ve Got No Strings…


It’s the boss’ fault.  There… I said it.  But that’s not important right now.  First, a lesson in macro-economics, innovation and human nature.

Is computing a commodity?

A commodity is a bulk product that has no differentiation among vendors.  Commodities are bought and sold almost exclusively based on price as opposed to quality or other unique values and features.

As I mentioned, it is frequently predicted that “computing” and “IT” in general will progress from an individualized endeavor taken on by many, to a commoditized good available on demand from a service provider… like electricity.  Makes sense, who wouldn’t use Enron if they could?

Electricity was not always the poster child of commoditization it is today.  Many companies produced it themselves; they had Vice President level members of the organization to manage it’s production and delivery, and all of it went the way of the lesser known VP of Healthcare (heh… think about it).  Electricity is clearly a commodity today.  The cost and effort associated with producing it makes it infeasible for most… though it’s not entirely unheard of.  The organization I work for produces energy at a significant savings over buying it from a utility, for example.  But electric is all the same for most, so it doesn’t matter who makes it or how it’s made, as long as it’s cheap and always on.  You know what you’re buying and you know what you’re paying.

“the goal of active technological innovation is to simplify, add or improve capability, and create independence”

But is that what people want?  Do you *want* to be tied to a utility for electric?  Let’s look at the phone company over the last decade.  What we’ve found is that people don’t want to be at the end of a leash, hence the cell phone, and people don’t want to be tied to a phone company, hence telephone number portability, the attack on carrier contract practices, and at the ultimate, non-carrier-specific VOIP – all the function of phone service, without the phone company… sorta.  Telephone service has all but lost commodity status, all because of innovative new ways to do the old thing.  It’s happening fast, too, despite every effort of the industry to push against the tide.  Would the baby bells really have survived this long without the rampant corporate protectionism in congressional and regulatory bodies?

The next few years should be interesting.  The cable company will provide data, phone, TV… and so will the phone company.  The electric company is getting in on that action too, finally defiling our virgin electrical outlets with your choice of smut, Ok Go videos and cold calls from your local newspaper.  But the forthcoming wireless technologies put into question whether “tethered” information services will be able to survive at all.  You may get your information from a local ISP over WiMax.  And here’s the very real possibility – a completely non-corporate, community-based wireless mesh.  You buy a box, that box talks to as many other boxes it can find, wirelessly, and we all become one seamless, unowned service provider.  Unlimited data for all, anytime, all the time, with limitless redundancy.

The Internet of the Fututre?I hold out little hope for that last option.  I think it will be regulated out of existence or lost in the standards committees or fail miserably in proprietary-ville.  The technology to do it exists today, and several companys could make a mint off of supplying the gear, but too many existing companies will feel they need to be protected from such a democratization of service, and there’s no shortage of lawmakers willing to comply, quid pro quo.

So, back to electricity.  If electricity was able to be produced in large quantities easily, safely, cheaply, and reliably, even redundantly… using a device that fits in with your air conditioner and water heater… would you use an electric company?  Of course not, people don’t *desire* utility service, they simply endure it as a matter of cost (including time, risk, reliability, etc). 

I say all this to illustrate a simple truth.  In practice, the goal of active technological innovation is to simplify, add or improve capability, and create independence – “Hey, look what *you* can do now.” 

It takes no great leap of wisdom to say that something, sometime down the road, might become a commodity.  Everything has that potential.  All it requires is that a something is either so unwieldy that it can’t be done/produced independently, or so stagnant and common that there is no way to get an advantage through independence – “Hey, we’ll do that for you faster/cheaper/better than you can do it yourself.”.

It’s that second part that forms the basis of the outsourcing debate.  There is a corporate belief that IT is stagnant.  There is a belief that there is no differentiation between IT services…. and that for a specific amount of money, you get a specific amount of service.  Is that true?  Or has IT has simply been so misaligned with business, its strengths so under-utilized, its impact so poorly measured, that no one has a $*%(#_@ clue if the power is on?

So is computing, and therefore IT, a commodity?  Does treating it as such have merit?  We’ll find out in the next article… and I’ll blame the boss – again.

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